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I'm renewing my lease, and the agent I worked with a year ago is asking for a 'renewal fee.' Is that legal?

This request should be a red flag. 

Flickr / Steven Pisano

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Question:

A year ago I worked with an agent to find an apartment. I signed a year-long lease and paid a 15 percent broker fee. My boyfriend and I recently decided that he will move in with me, which I informed my landlord about and he approved. I'm renewing the lease and keeping just my name on it. A few days ago I got a call from the agent confirming that I was renewing. He says that my boyfriend will have to go through the application process and pay a broker fee of 7.5 percent of the annual rent. Is this additional fee legal? What will happen if we do not pay it?

Answer:

This request should definitely send up a red flag, our experts say, because the fee renters pay brokers when signing an apartment lease is supposed to be a one-time expense. 

First, it helps to be aware of your rights as a tenant. Under New York City's roommate law, you have a right to a roommate (in this case, your boyfriend) as long as you live in a privately owned building and you are the only person named on your lease. 

"As long as you disclose the presence and identity of your boyfriend to your landlord, you're allowed to have him live there," says Douglas Wagner, a broker with BOND New York. The roommate law doesn't specify whether a roommate must pay an additional fee, Wagner adds, "but in 24 years, I've never heard of such a charge at the time of lease renewal, especially when a broker's fee was paid for the initial lease."

Some management companies may charge certain tenants a small fee upon lease renewal, but such requests do not ordinarily come from agents or brokers. 

"Usually firms that are members of REBNY do not charge an additional commission on a lease renewal or extension. However, there are some management companies for condos and co-ops that will charge a processing fee of a few hundred dollars," says Dennis Hughes, a broker with Corcoran. "It is important for the consumer to carefully read the agency’s fee agreement, if you are asked to sign any documentation." 

In addition to checking the contract you signed with the broker, you should also speak to your landlord and make sure he understands that your boyfriend is moving in as a co-occupant, but will not be named on the lease. 

"The request to have you re-apply for the apartment together sounds like the landlord wants to issue a new lease to both of you, rather than renew your lease and have your boyfriend live there as an occupant," Wagner says. "Since you have a primary relationship with your landlord for the past year, I recommend confirming with your landlord which scenario the landlord wants." 

Keep in mind that whatever he wants, though, if you are the only person on the lease, you have the right to a roommate, and your boyfriend should not be charged a fee to move in with you. All you have to do, in fact, is inform your landlord 30 days before your boyfriend moves in; see this "Ask Sam" column for more information on your responsibility in this situation. It may be best to send your landlord a letter via certified mail confirming your intentions.

As for the broker, experts agree your boyfriend should not have to pay him. 

"I'm not sure if it's illegal, but I have never heard of that practice before," says Stan Broekhoven, a broker with Keller Williams. "If the landlord approved the boyfriend moving in and you are just renewing your lease, you should not pay a broker fee nor should you have to get approved again. You only pay the broker fee once, not every time you renew your lease." 

Ignore this request for a 7.5 percent fee, Hughes advises, but let your landlord know that the broker is behaving unscrupulously.

"I would advise the tenant to ask the landlord for his position on the broker," Hughes says. "Is this the way the landlord wants to be represented, assuming the broker asking for the commission has an exclusive agreement with the owner?"

And in the future, seek out brokers who work with reputable agencies, have solid track records, and can refer you to past clients who are happy with their work. For more information, see our guide on how to vet a broker.


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